California's $20 Minimum Wage for Fast-Food Workers May Have 'Consequences': Study

Researchers found the wage hike has driven higher menu prices, less hourly work, and more automation that could replace workers.

Apr. 14, 2026 at 10:25pm

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A minimalist composition of overlapping triangles and circles in shades of blue, red, and yellow, conceptually representing the economic impacts of a minimum wage increase on the fast-food industry.A geometric illustration capturing the complex economic tradeoffs of California's $20 minimum wage for fast-food workers.Santa Cruz Today

A new study from researchers at the University of California, Santa Cruz found that California's historic $20 per hour minimum wage for fast-food workers, implemented in 2024, has led to higher menu prices, reduced work hours, and increased automation that could replace workers. The report, based on interviews with over 100 fast-food franchise owners and managers, as well as independent restaurant owners, suggests the policy has had unintended negative consequences, contrary to policymakers' expectations.

Why it matters

The findings of this study raise questions about the long-term impacts of minimum wage increases, particularly in the fast-food industry, which is a major employer of low-wage workers. The potential consequences, such as job losses and higher consumer prices, could undermine the intended benefits of the policy for workers.

The details

Researchers at the University of California, Santa Cruz interviewed over 100 fast-food franchise owners and managers, as well as three independent restaurant owners in Santa Cruz, to assess the impacts of the $20 per hour minimum wage that went into effect in California in 2024. They found that the wage increase has driven higher menu prices, reduced work hours, and increased automation that could replace workers. The report, which has not been peer-reviewed, suggests the policy has had unintended negative consequences, contrary to policymakers' expectations.

  • The $20 per hour minimum wage for fast-food workers in California went into effect in April 2024.
  • The study was released in March 2026, ahead of the 2-year anniversary of the minimum wage increase.

The players

University of California, Santa Cruz

A public research university located in Santa Cruz, California, which conducted the study on the impacts of California's $20 per hour minimum wage for fast-food workers.

Stephen Owen

A researcher at the University of California, Santa Cruz who was involved in the study and stated that the legislation has had unintended negative consequences.

Gavin Newsom

The Governor of California who signed AB 1228 into law in 2023, which established the $20 per hour minimum wage for fast-food workers and the Fast Food Council.

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What they’re saying

“Based on what we've found, I think this legislation is a classic case of 'no good deed goes unpunished.' There are unintended consequences and knock-on effects, and overall, I think the results have definitely not been as positive as policymakers had been expecting.”

— Stephen Owen, Researcher, University of California, Santa Cruz

“The working poor struggle to get by in California, and that's a fact. So if we're serious about helping the working poor, then I think it makes a lot more sense and would ultimately be more effective for the government to focus on other types of policies, such as deregulation to promote business growth and targeted income assistance to families working at or below the poverty line. Freeing businesses from unnecessary regulations would be a much better way for California to empower business growth, leading to increased hiring and higher wages as businesses are allowed to prosper.”

— Stephen Owen, Researcher, University of California, Santa Cruz

What’s next

The researchers plan to continue studying the long-term impacts of the $20 minimum wage on the fast-food industry in California, including potential job losses and effects on consumer prices.

The takeaway

This study suggests that while the $20 minimum wage for fast-food workers in California was intended to help low-wage workers, it has had unintended consequences such as higher menu prices, reduced work hours, and increased automation. The findings raise questions about the effectiveness of minimum wage increases as a policy tool for addressing income inequality and supporting the working poor.